Faculty of Arts and Science FiF-avhandling 104 Collaborative New Product Development: Supplier Selection and Purchasing Lisa Melander 2011 Department of Management and Engineering Linköping University SE- 581 83 Linköping © Lisa Melander, 2011 Faculty of Arts and Science, FiF-avhandling 104 ISBN: 978-91-7393-028-4 ISSN: 1401-4637 Printed by: LiU-Tryck, Linköping Distributed by: Linköping University Department of Management and Engineering SE--581 83 Linköping Tel: + 46 13-281000, fax: + 46 13-281101 Abstract Suppliers provide new technology to firms and are important in firms‟ NPD. It is not sufficient for firms to select the most appropriate technology; they must also select the most appropriate supplier for their NPD. The purpose of this licentiate thesis is to map and identify criteria used in the process of selecting a suitable supplier, and explore the role of Purchasing in NPD collaborative pro- jects. This thesis is based on case study research where two NPD projects have been studied. The case sampling consisted of searching for projects that were be- lieved to be rich in information about the process of supplier selection. Both studied were conducted at ABB, which is a large high-tech system integration firm. ABB was a good firm to study because as a company, it is used to imple- menting new technology from suppliers. The data collection consisted of inter- views, factory visits, internal and external documents. The data gathered was analysed by conducting content analysis and then using categorization to struc- ture it. In addition, within-case analysis as well as cross-case analysis were per- formed. The research process was inductive and its purpose was formed throughout the on-going studies. This study has identified and categorised criteria for selecting a supplier that is suitable to become involved in NPD projects. Both criteria from existing litera- ture and from the NPD projects studied are mapped into a process model of supplier selection in which they are classified into three categories: product and production factors, firm characteristics and relational criteria. The main find- ings from this study are criteria that firms use in their assessment and selection of suppliers. These supplier assessment criteria can be divided into basic, prod- uct and firm criteria. One difficult element to consider is the uncertainty of an NPD project. The thesis argues that uncertainty can be divided into technologi- cal and strategic uncertainty. Additional criteria to consider in supplier selection are divided into technological, business and relational-specific criteria. This study has investigated the role of Purchasing in NPD and argues that Pur- chasing can be a trouble-shooter. This role can solve problems that emerge in collaborative NPD projects that involve suppliers. The types of problems that a trouble-shooter can solve are concerned with lack of commitment and interest from the supplier or conflicts when the supplier has changed its strategy. To solve these problems, Purchasing does not need to be present during the whole NPD project, but can have the role of a trouble-shooter and become involved in the project when the problems have emerged. By not being a part of the NPD team, Purchasing can evaluate the situation objectively without affecting the personal relationships that exist among the individuals in the NPD. Key words: Supplier selection, NPD, Purchasing, case studies Acknowledgements Holding this book in my hand almost feels unreal. What from the beginning (2009) seemed so far away, is actually here today (2011). Time has flown by as I worked in my office, participated in PhD courses, taught undergraduates, and somewhere in between I conducted research. These years at LIU have been enjoyable and I have several people to thank for making the time to licentiate intriguing. First, I must thank Fredrik Tell, who not only believed in my ideas and allowed me to pursue my own research interest, but also has supported, questioned and shared tough times. Nevertheless, mostly I appreciate Fredrik‟s positive atti- tude, loud voice and catching laughter. Second, Nicolette Lakemond, who agreed to be my co-supervisor, shares my research interests and always has good suggestions on which direction to go next. Moreover, her knowledge, insights and comments have been priceless. Two persons have commented heavily on my work: Jonas Rundquist and Mat- tias Johansson. This book would not be the same without your efforts, it has been very much appreciated! Additionally, Mette Præst Knudsen has provided me with insights in methodological issues and inspiration for future research. Thank you also to my co-workers at FEK and fellow PhD students at IEI. My time at the university would not have been half as interesting without you! In particularly thank you to Elisabeth, Jenny, Birgitta and Susan, who have been my PhD colleagues at business administration from almost my first day as a PhD student. I must give a special thanks to Elisabeth Borg, who has been a great colleague and friend. We have shared many laughs and frustrations. Thank you for always taking the time to listen, give suggestions and being a great friend. Thank you also to ABB, in particular Per Halvarsson and Peter Isberg, for par- ticipating in this study and showing interest in this research. Many thanks to Michel Baujard at SKF, who not only enabled a study in Gothenburg, but also managed to include people from Austria. These years have been a struggle at times. Persons close to me are quite aware of that. Thank you to my twin Anna, for always listening to my rambling even though I know it must bore you. You also manage to keep me in reality and stop me from drowning in academia, which is not an easy task! Finally, thank you Alexander for not wanting to talk about work at home but never stopping me when I glide into a conversation about it. This thesis has been a project, some at IEI would call it a baby. But as Nicolette so accurately put it “Lisa has two babies, the first is Tjarlie and the second is the thesis”. Thank you all for enduring my endless talk about my dog! Lisa Melander Part I: Synthesis Table of Contents 1 Introduction .......................................................................................................... 1 1.1 Background .................................................................................................. 1 1.2 Purpose ......................................................................................................... 3 1.3 Outline........................................................................................................... 4 2 Supplier involvement in NPD ............................................................................ 5 2.1 Firm collaboration ....................................................................................... 5 2.2 Is collaboration advantageous for the buying firm? .............................. 8 2.3 Models ......................................................................................................... 10 2.4 The assessment-selection-integration process ...................................... 12 2.4.1 Supplier Assessment ............................................................................. 13 2.4.2 Supplier Selection .................................................................................. 15 2.4.3 Supplier Integration .............................................................................. 19 2.5 Buying firms‟ development of suppliers ................................................ 21 2.6 Overview of supplier assessment, selection and integration .............. 24 2.7 Purchasing‟s role ........................................................................................ 26 2.7.1 Purchasing‟s evolvement towards a strategic position .................... 26 2.7.2 Purchasing as a strategic asset ............................................................. 28 2.7.3 Purchasers .............................................................................................. 31 2.8 Summary ..................................................................................................... 32 3 Research methodology ....................................................................................... 33 3.1 Research design .......................................................................................... 33 3.2 Case sampling ............................................................................................. 37 3.3 Case selection ............................................................................................. 40 3.4 Case study ................................................................................................... 41 3.4.1 Data collection ...................................................................................... 43 3.4.2 Interviews ............................................................................................... 43 3.4.3 Case 1 ...................................................................................................... 45 3.4.4 Case 2 ...................................................................................................... 47 3.5 Data analysis ............................................................................................... 49 3.5.1 Content analysis and categories .......................................................... 50 3.5.2 Within-case analysis .............................................................................